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Archive for the ‘Big Government’ Category

Having become interested in public policy because of Ronald Reagan’s message of limited government and individual liberty, I’m understandably depressed by the 2016 election.

But we can at least learn something from the process.

Robert Kagan of the Brookings Institution savages Donald Trump in a column for the Washington Post. Here’s a particularly brutal excerpt.

…what Trump offers his followers are not economic remedies — his proposals change daily. What he offers is an attitude, an aura of crude strength and machismo, a boasting disrespect for the niceties of the democratic culture that he claims, and his followers believe, has produced national weakness and incompetence. His incoherent and contradictory utterances have one thing in common: They provoke and play on feelings of resentment and disdain, intermingled with bits of fear, hatred and anger. His public discourse consists of attacking or ridiculing a wide range of “others” — Muslims, Hispanics, women, Chinese, Mexicans, Europeans, Arabs, immigrants, refugees — whom he depicts either as threats or as objects of derision.

Since I don’t know what actually motivates Trump or his voters, I have no idea whether the above passage is fair, but it is true that Trump’s policy agenda oftentimes doesn’t make sense.

But here’s the part of the column that caught my attention.

…what he has tapped into is what the founders most feared when they established the democratic republic: the popular passions unleashed, the “mobocracy.” Conservatives have been warning for decades about government suffocating liberty. But here is the other threat to liberty that Alexis de Tocqueville and the ancient philosophers warned about: that the people in a democracy, excited, angry and unconstrained, might run roughshod over even the institutions created to preserve their freedoms.

I’m tempted to send Mr. Kagan a card that says “Welcome to the Club.” Libertarians and small-government conservatives for decades have been warning against the dangers of untrammeled majoritarianism.

We revere the Constitution because we believe that our freedoms and liberties should not be decided by 51 percent of the population. We cherish the fact that our Founding Fathers put limits on the power of the federal government.

But I don’t think Kagan deserves a card because his opposition to mobocracy is very selective. Has he ever criticized the Supreme Court for acquiescing to the New Deal and abandoning its obligation to limit Washington to the enumerated powers listed in the Constitution?

Did he condemn Chief Justice John Roberts and the Supreme Court for deciding that the “power to tax” somehow gave the federal government the authority to force citizens to buy government-approved health insurance plans?

I don’t recall seeing Kagan fret about these majoritarian steps that eroded constitutional liberties, so it’s hard to take seriously his complaints now.

I’m also unimpressed by his concerns about potential abuse of power by a Trump Administration.

Trump will…have ridden to power despite the party, catapulted into the White House by a mass following devoted only to him. …In addition to all that comes from being the leader of a mass following, he would also have the immense powers of the American presidency at his command: the Justice Department, the FBI, the intelligence services, the military. Who would dare to oppose him then? …is a man like Trump, with infinitely greater power in his hands, likely to become more humble, more judicious, more generous, less vengeful than he is today, than he has been his whole life? Does vast power un-corrupt?

He raises some very legitimate concerns. I don’t trust Trump with lots of power. That being said, the hypocrisy is staggering.

Did he write any columns about Obama’s sordid misuse of the IRS to target political opponents?

Has he complained about Operation Chokepoint? Fast and Furious? NSA spying? Efforts to undermine the 1st Amendment and restrict political speech?

Why is abuse of power okay for Obama but not for Trump?

Notwithstanding Kagan’s glaring hypocrisy, his conclusion may be correct.

This is how fascism comes to America, not with jackboots and salutes…but with a television huckster, a phony billionaire, a textbook egomaniac “tapping into” popular resentments and insecurities.

Except it needs to be expanded. Because fascism already has a foothold in America.

And it might expand not just because of a “television huckster,” but also because of a corrupt former presidential spouse or an envy-riddled Vermont crank, both of whom tap into resentments and insecurities.

Indeed, Kagan’s description of Trump sounds a lot like Clinton or Sanders if you replace “Muslim” and “Mexican” with “banker” or “top 1 percent.”

Charles Cooke of National Review wonders whether Trump will lead leftists to change their minds about government power. He starts by highlighting conservative opposition to an all-powerful presidency.

…progressives tend not to buy the argument that a government that can give you everything you want is also a government that can take it all away. For the past four or five years, conservatives have offered precisely this argument, our central contention being that it is a bad idea to invest too much power in one place because one never knows who might enjoy that power next. And, for the past four or five years, these warnings have fallen on deaf, derisive, overconfident ears. …we have argued that Congress ought to reclaim much of the legal authority that it has willingly ceded to the executive, lest that executive become unresponsive or worse; that, once abandoned, constitutional limits are difficult to resuscitate; that federalism leads not just to better government but to a diminished likelihood that bad actors will be able to inflict widespread damage.

So are statists about to get religion on the issue of big government, albeit belatedly?

Time and time again, Trump has been compared to Hitler, to Mussolini, to George Wallace, and to Bull Connor. Time and time again, self-described “liberals” have recoiled at the man’s praise for internment, at his disrespect for minorities and dissenters, and at his enthusiasm for torture and for war crimes. …If one were to take literally the chatter that one hears on MSNBC and the fear that one smells in the pages of the New York Times and of the Washington Post, one would have no choice but to conclude that the progressives have joined the conservatives in worrying aloud about the wholesale abuse of power. …Having watched the rise of Trumpism — and, now, having seen the beginning of violence in its name — who out there is having second thoughts as to the wisdom of imbuing our central state with massive power? …I would genuinely love to know how many “liberals” have begun to suspect that there are some pretty meaningful downsides to the consolidation of state authority. …When Peter Beinart warns that Donald Trump is a threat to “American liberal democracy” — specifically to “the idea that there are certain rights so fundamental that even democratic majorities cannot undo them” — he is channeling the conservative case for the Founders’ settlement, and taking square aim at the Jacobin mentality that would, if permitted, remove the remaining shackles that surround and enclose the state. Does he know this?

I suspect the answer to all these questions is “no.”

There is nothing genuinely liberal about most modern leftists. They will act hysterical about the prospect of Trump holding the reins of power, but I predict they will fall silent if Hillary is in the White House.

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In hopes of learning some lessons, let’s take a tour through the dank sewer of government, the place where malice is rewarded and malfeasance is a stepping stone to success.

Writing for the Washington Post, Professor Stephen Medvic argues that America’s political system is mostly clean.

…there is very little political corruption in the United States. …According to Transparency International’s 2015 Corruption Perceptions Index, a survey of expert opinion about the level of corruption in 167 countries, only 15 countries were judged to be cleaner than the United States. …our score of 76 (out of 100) was considerably higher than the average score of 67 in the European Union and Western Europe.

But before concluding that Mr. Medvic is a crazy crack addict, he is using a very narrow definition of corruption in the above excerpt, focusing on politicians who trade votes for under-the-table money that goes into their personal bank accounts.

Using a broader definition, there’s a different conclusion.

…corruption happens whenever there is a privileging of private interests over the public good in the policymaking process. Under this interpretation, while elected officials may not be reaping private benefit from their positions of power, they are placing the (private) interests of some subset of the public above the collective interests of the people as a whole. When a politically powerful industry gets public subsidies or a well-connected corporation receives a special tax break, it suggests to some that the system has been corrupted.

And from this perspective, corruption is rampant.

Here are six examples.

First, Veronique de Rugy of the Mercatus Center describes how a Louisiana politician (gee, what a surprise) wants to use government coercion to hinder competition in the market for contact lenses.

An estimated 40 million Americans wear contact lenses. That’s a $4 billion industry. Thanks to the heavy-handed government regulation of all things health care, contacts already cost more than they should. However, if an ongoing effort to reduce competition through government cronyism were to succeed, costs might soon rise even more. …a bill was introduced by Sen. Bill Cassidy, R-La., called the Contact Lens Consumer Health Protection Act of 2016, which would place pointless and costly new mandates on sellers and eliminate market competition. …it would require dedicated phone lines and email addresses for prescribers to communicate questions to sellers about the prescriptions the sellers need them to verify before the sellers are allowed to fill orders. …With this move, these special interests demonstrate that they would rather avoid the grind of competition, which requires that companies deliver high-quality goods at low prices to consumers. Instead, they’re trying to rig the system to force consumers into paying more for less.

Paying more for less? Maybe that should be Washington’s motto, though it’s hard to argue with the existing motto.

Second, Mike Needham of Heritage Action exposes how a shoe company cut a sleazy deal with the Obama White House.

Currently, new Army and Air Force recruits can use a one-time stipend to choose from about a dozen different shoes from multiple manufacturers. …shoe choice is exceedingly important for not only comfort, but also to prevent injury. Despite the differences that exist among the military’s roughly 250,000 new recruits every year, there is an effort afoot to force those recruits to wear shoes made by just one company. During last month’s mark up of the National Defense Authorization Act (NDAA), Massachusetts Democrat Niki Tsongas added language that would effectively force the Department of Defense (DoD) to provide only New Balance athletic shoes for new military recruits. …This alone reeks of the revolving door politics the political left is usually swift to condemn, but it gets even worse. Last month, New Balance revealed the company disengaged from the fight over the Trans-Pacific Partnership last year because it had cut a secret deal with the Obama administration. …Using the legislative process to limit choice and competition is par for the course in our corrupt political system, but doing so at the expense of America’s brave sons and daughters outrageous.

Unfortunately, wasting money is a Pentagon tradition.

Third, here’s a typical story of insider dealing in the bureaucracy.

A Department of Veterans Affairs manager who steered a $4 million contract to a relative was promoted to the second-highest position in the hospital weeks after she was caught and exposed in the national media. …The hospital evaluated 16 plots, five of which were owned by relatives of Gillis. A committee ranked them by suitability, and a non-Gillis plot was determined to be best. But in an “unusual” move, the VA selected land owned by William Gillis instead, and paid him $4.25 million. …Within three months, in June 2015, Gillis was put on a detail to serve as acting associate director, the second-highest position in the hospital, The Daily Caller News Foundation has learned. The elevation was a big promotion considering the fact that others were more senior and higher-ranked.

I suspect Gillis was one of the VA bureaucrats to also get a fat bonus despite shoddy treatment of America’s veterans.

Fourth, a former Senator is now lobbying to help H&R Block stifle competition for mom and pop tax preparers.

Former Sen. Jon Kyl (R-Ariz.) has registered to lobby on behalf of the tax preparation company H&R Block. Kyl and a colleague at his new employer, Covington & Burling, will advocate on behalf of H&R Block in favor of the “creation of minimum standards for paid tax preparers,” according to a registration form. …H&R Block has also hired another firm, Fierce Government Relations, that it is lobbying on “oversight of tax preparation” for the company. Forbes-Tate and Rock Creek Counsel also lobby for H&R Block, and the company has its own in-house lobbyists.

Yet another example of a Republican advocating bigger government to line his own pockets.

Fifth, here’s another probable example of insider dealing.

U.S. Sen. Diane Feinstein’s husband Richard Blum won the first-phase construction contract for California’s high-speed rail. …If I didn’t witness the insanity and corruption in politics every day, I wouldn’t have believed this. “The Perini-Zachary-Parsons bid was the lowest received from the five consortia participating in the bidding process, but “low” is a relative term,” the Laer Pearce, author of Crazifornia wrote. ”The firms bid $985,142,530 to build the wildly anticipated first section of high speed rail track that will tie the megopolis of Madera to the global finance center of Fresno. Do the division, and you find that the low bid came in at a mere $35 million per mile.”

Wasting money on a high-speed rail boondoggle is bad enough, but steering the contract to the spouse of a senior politician adds insult to injury.

Sixth, let’s look at how a former Obama appointee is getting rich because of regulations he oversaw while in government.

Even progressives need to make a living. …Some of them are even smart enough to do it by exploiting the regulations they pushed while in government. …Jim Shelton, the deputy secretary of education in 2013 and 2014…became “chief impact officer” at 2U, a publicly traded company that caters to public and nonprofit colleges and universities. …it’s especially notable that Mr. Shelton has joined 2U because its for-profit online business model allows it to circumvent the onerous regulation that the Department of Education promoted to punish for-profit schools during Mr. Shelton’s tenure. …This rule…has forced even the best for-profit schools to shrink enrollments. Students who have suffered the most tend to be low-income and minorities… The rule has one giant loophole. It doesn’t apply to nonprofit or public universities, and it also largely exempts community colleges. Many of these have graduation rates or loan default rates that are as bad or worse than for-profits… Which works out beautifully now for Mr. Shelton and 2U, which can work around the gainful-employment rule and still make a buck. 2U’s customers don’t have to meet the rule.

Sounds like a scene out of Atlas Shrugged, right?

So what’s the solution to all this sleaze in the Washington Favor Factory?

Returning to the column from Prof. Medvic, he seems to think that the problem is money.

The real problem is…that economic elites and business organizations have a greater impact on policy outcomes than do groups representing average citizens. …the playing field is tilted toward those with money. …the problem with money in politics is that it undermines an essential principle of democratic government.

That’s wrong. Laughably wrong.

The problem is that government has too much power. If we want to reduce sordid dealmaking (and the six examples listed above are a very tiny tip of a very large iceberg), then we need to reduce the size and scope of Washington.

Which is the message of this video.

I suppose the easy thing to do at this stage is to attack politicians for constantly expanding the size and scope of government. And I certainly have done that. A lot.

But let’s not overlook the role of culture. The crowd in Washington gets away with lots of venal behavior because an ever-larger share of the population is losing the spirit of self reliance and personal responsibility.

With that in mind, there’s very little reason for optimism once people decide that it’s okay to steal from their neighbors so long as they use government as a middleman.

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In my presentations about how to deal with budgetary deterioration and fiscal crisis, I often share with audiences a list of nations that have achieved very positive results with spending restraint.

The middle column shows how these countries limited the growth of government spending for multi-year periods.

The next column of numbers reveals how multi-year spending restraint leads to significant reductions in the amount of economic output that is diverted to the government.

And when you address the underlying problem of excessive government spending, you automatically ameliorate the symptom of red ink, as shown in the final column of numbers.

At this point, I usually ask the audience whether they’ve ever seen a similar table that purports to show nations that have obtained similarly good results with tax increases.

The answer is no, of course, though it’s not really a fair question to people who don’t study fiscal policy.

More important, I ask the same question when I have debates with my statist friends from left-wing organizations. They generally try to change the subject. Some of them bluster about “fairness.” And a few of them think Sweden is an acceptable answer until I point out that it became rich when government was small but began to lose ground once a large welfare state was imposed beginning in the 1960s (as explained in this video).

But Sweden wouldn’t be a good answer even if its economy hadn’t slowed down. That’s because the question is how to climb out of a fiscal hole. In which case Sweden actually provides evidence for my position!

To understand why tax increases aren’t the right way to deal with a fiscal mess, let’s look at Greece. From the moment the crisis began, Greek politicians started raising taxes. And they haven’t stopped, with many of the tax hikes being cheered by international bureaucracies.

This is a never-ending story.

With new chapters being written all the time. Here’s a report from Reuters on the latest “reform” package from Greece. As you might suspect, it’s basically a bunch of tax hikes. Here’s what the politicians approved on social insurance taxes.

Sets social security contributions at 20 percent of employees’ net monthly income – with 13.3 percent burdening employers and 6.7 percent employees. Reforms the social security contribution base from notional to actual incomes for the self-employed, including farmers and lawyers, forcing them to make a contribution to pension funds which is phased in over a five-year period to 20 percent of their income.

There are also income tax increases.

Lowers the income tax-free threshold, or personal allowance, to an average of around 8,800 euros a year from around 9,500; makes income bands narrower, increases tax coefficients. Lowest tax band is now 22 percent on a gross income of 20,000 a year compared to 22 percent for 25,000 euros which existed previously. The upper tax band, of 45 percent, is now imposed on gross incomes exceeding 40,000 as opposed to 42 percent on income above 42,000 under the previous arrangement. Includes EU farming subsidies on taxable income.

And there are further income tax hikes as part of the “solidarity” levy, which is basically another income tax.

Solidarity Levy…on net incomes ranges from the lowest 2.2 percent on incomes from 12,000 to 20,000 a year, to 5.0 percent up to 30,000, and 6.5 percent up to 40,000. The highest band is 10 percent on incomes above 220,000. By comparison, the highest band in that category was 8.0 percent before the new reform was pushed through, on earnings exceeding half a million euros.

And there also will be more double taxation.

Dividends Tax: Increases to 15 percent from 10 percent.

You would think this big package of tax hikes might satisfy the crowd in Athens for a year or two.

But that would be a very bad assumption. Amazingly, the politicians in Greece already are looking for additional victims, as reported by ABC News.

Already, a new bill is being prepared, calling for higher taxes on a range of products, from tobacco to beer to broadband Internet connections. This bill is expected to pass later in the month.

And they’re not exactly apologetic about their tax-aholic actions.

Prime Minister Alexis Tsipras and his ministers defended their plans, saying…that taxes were better than spending cuts. …Labor Minister George Katrougalos, who introduced the bill, said that…the bill’s provisions showed the way forward for social policy in a Europe dominated by pro-market “neoliberals.”

Sadly, Mr. Katrougalos may be correct. I won’t be surprised if the rest of Europe follows Greece off the cliff.

Though he’s smoking crack if he thinks the rest of the continent is dominated by neoliberals (i.e., classical liberals or libertarians).

Not that we’ve established that Greece has been trying to solve its fiscal mess with tax hikes, let’s look at the results.

Has debt been reduced? Hardly, though to be fair it seems to have stabilized.

In any event, we haven’t seen the big reductions in debt that are associated with spending restraint

And what about the economy? Here, the news is uniformly grim, doubtlessly in large part because of all the tax hikes.

It’s rather ironic this chart is based on periodic IMF forecasts since that bureaucracy is infamous for advocating endless tax hikes.

One wonders if the IMF bureaucrats will eventually learn some lessons?

I’m not holding my breath, just like I’m not optimistic that Greek politicians will address the real problem in their country of excessive dependency caused by a bloated public sector.

But maybe the rest of us (other than Hillary and Bernie) can learn what not to do.

P.S. For more information, here’s my five-picture explanation of the Greek mess.

P.P.S. And if you want to know why I’m so dour about Greece’s future, how can you expect good policy from a nation that subsidizes pedophiles and requires stool samples to set up online companies?

P.P.P.S. To offset the grim message of today’s column, let’s close with my collection of Greek-related humor.

This cartoon is quite  good, but this this one is my favorite. And the final cartoon in this post also has a Greek theme.

We also have a couple of videos. The first one features a video about…well, I’m not sure, but we’ll call it a European romantic comedy and the second one features a Greek comic pontificating about Germany.

Last but not least, here are some very un-PC maps of how various peoples – including the Greeks – view different European nations.

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Let’s take a look at President Obama’s economic legacy.

The Washington Examiner opines on President Obama’s remarkable claim that he saved the world economy.

President Obama…wants to be remembered for…[being]…the savior of the American and global economies. “There are things I’m proud of,” he said, citing Obamacare, then added, “Saving the world economy from a Great Depression, that was pretty good.”

Not so fast. Looking at the economy’s anemic numbers the editors are less than impressed.

Obama will end eight years in office without presiding over a thriving economy of the sort America enjoyed in the past. It also suggests that even the mediocre growth of recent years depended on high oil prices, which have collapsed by more than half. This is the bitter fruit of creationist economics, the erroneous belief that government activity can somehow conjure new wealth and value.

The Wall Street Journal is similarly dour about Obama’s economic legacy.

When did Americans decide that 1% or 2% economic growth is acceptable, that puny wage increases are inevitable, and that we should all merely shrug and get used to the country’s diminished expectations? …the first quarter is further evidence of what has been the weakest economic expansion in the postwar era. …All of this continues the slow-or-slower pace of this entire expansion that began nearly seven years ago. Each year has had a similar GDP dip, and growth has never exceeded 2.5% (2010). The American economy hasn’t grown by more than 3% since 2005 (3.3%), the longest such stretch of malaise that we can find in the Bureau of Economic analysis tables going back to 1930. …Faster growth is possible, but it will take better policies.

In a column for Bloomberg, Narayana Kocherlakota, looks at what’s happened and compares it to what CBO projected would happen.

it’s not hard to see why many people are disappointed with the performance of the economy during Obama’s time in office. In January 2009, at the beginning of Obama’s first term, the nonpartisan Congressional Budget Office issued a 10-year forecast for the U.S. economy, including such indicators as unemployment, gross domestic product, the budget deficit, government debt and interest rates. …The unemployment rate has come closest to expectations. …Elsewhere, the story is less positive. Total income growth in the U.S. has fallen well short of expectations, in both nominal and inflation-adjusted terms. …the federal budget deficit…still much larger than the CBO forecast in 2009 — as is the ratio of government debt to GDP.

Here’s his chart.

Last, but not least, Louis Woodhill shares some numbers that capture Obama’s real legacy.

America’s elites have largely given up on growth, and are now distracting themselves with academic musings about “secular stagnation.” …assuming 2.67% RGDP growth for 2016, Obama will leave office having produced an average of 1.55% growth. This would place his presidency fourth from the bottom of the list of 39*, above only those of Herbert Hoover (-5.65%), Andrew Johnson (-0.70%) and Theodore Roosevelt (1.41%)

What makes this final comparison so damning is that Obama had the comparative good fortune to enter office in the middle of a recession. Which means, all things equal, that his numbers should look very positive.

Instead, he’s managed to compile one of the worst track records.

When I do comparisons, I like using the interactive recession/recovery site of the Minneapolis Federal Reserve, which allows users to compare every recession and recovery since the end of World War II.

Here’s how President Obama (red line) ranks on GDP growth.

As you can see, whether your starting point is the beginning of the recovery or the beginning of the recession, Obama is in last place.

He does slightly better on employment. He still has one of the worst records (again, the red line), but he does beat George W. Bush’s also-anemic performance on job creation.

By the way, some of you may be wondering why the employment data for Obama is so weak when the unemployment rate has significantly fallen.

The answer is that the unemployment rate doesn’t count people who have given up on finding a job, whereas the Minneapolis Fed data counts how many new jobs are being created.

And it’s the amount of people productively employed that matters if we want more economic output, so the Minneapolis Fed data is far more important and revealing than the official unemployment rate numbers.

Unfortunately, Obama and his team haven’t figured out (or simply don’t care) that jobs are more likely to be created when government is smaller rather than bigger.

By the way, this analysis presumably won’t be very compelling for Obama supporters because they’ll simply assert things could have been much worse without his policies.

They may even believe the President’s claim that he saved the American economy from a Great Depression.

But they overlook the fact that the economy normally bounces back quickly from a downturn. It was only during the 1930s, when Hoover and Roosevelt competed to impose bad policy, that a recession became a depression.

The bad news is that President Obama’s policies haven’t helped today’s economy, but the good news is that his policies are nowhere near as harmful as the combined statist agendas of Hoover and Roosevelt.

So if we want to learn a lesson on what works, the economy’s very strong boom under Reagan is a good case study. And if you want to go back further, the anti-Keynesian booms after World War I and World War II also teach important lessons.

P.S. President Obama is completely correct when he points out that America’s economy is generally stronger than European economies. Unfortunately, he doesn’t seem to realize what this implies.

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There’s a very powerful statement, variously attributed to Alexis de Toqueville, Benjamin Franklin, or Alexander Tytler, that basically warns that democracy is doomed when people figure out they can vote themselves money.

There’s no evidence that any of them actually spoke or wrote those words, though I guess it doesn’t matter that the quote didn’t originate with someone like Franklin. What does matter is that it accurately captures something very important, which is the tendency for governments to over-tax and over-spend once people decide that it’s okay to use government coercion to take other people’s money.

But it’s still nice to be able to cite something accurate. With this in mind, I came up with my Theorem of Societal Collapse. And I think it’s actually more accurate than the vote-themselves-money quote because democracy doesn’t necessarily lead to statism. What leads to bad outcomes is democracy combined with bad values.

And a pervasive belief in redistributionism is a bad value. Heck, it’s a self-destructive value. Consider Greece. When you add together the people getting welfare and disability to the people getting pension payments to the people on the government payroll, it turns out that a majority of people in the country are riding in the wagon of government dependency.

That’s bad. But what makes the Greek situation so hopeless is that those are the same people who vote. Which means there’s very little chance of getting a government that would implement good policy.

After all, why would the recipients of other people’s money vote for politicians who support limits on redistribution?

But I’m not just blaming voters. Politicians also deserve scorn and disdain because they are the ones who often seek votes by promising to take other people’s money.

Some observers would like to believe that these politicians will use their supposed superior expertise and knowledge about public policy to make appropriate tradeoffs and prevent the system from becoming over-burdened.

But that’s somewhat naive.

Indeed, there’s an entire school of thought in economics, known as “public choice,” which is based on making real-world assumptions about the self-interested behavior of politicians and interest groups. Here’s a partial description from the Library of Economics and Liberty.

As James Buchanan artfully defined it, public choice is “politics without romance.” The wishful thinking it displaced presumes that participants in the political sphere aspire to promote the common good. …public officials are portrayed as benevolent “public servants” who faithfully carry out the “will of the people.” …public choice, like the economic model of rational behavior on which it rests, assumes that people are guided chiefly by their own self-interests… As such, voters “vote their pocketbooks,” supporting candidates and ballot propositions they think will make them personally better off; bureaucrats strive to advance their own careers; and politicians seek election or reelection to office. Public choice, in other words, simply transfers the rational actor model of economic theory to the realm of politics. …collective decision-making processes allow the majority to impose its preferences on the minority.

In other words, both voters and politicians can have an incentive for ever-larger government, even if the end result is Greek-style fiscal chaos because taxes and spending reach ruinous levels.

I call this “Goldfish Government” because some think that a goldfish lacks the ability to control its appetite and therefore will eat itself to death when presented with unlimited food.

Indeed, public choice scholars explicitly recognize that unconstrained democracy can lead to bad results.

Public choice scholars have identified…deep…problems with democratic decision-making processes.

That’s the bad news.

The good news is that their research suggests ways to compensate for the natural tendency of ever-expanding government.

Like that founding father of the American constitutional republic, public choice recognizes that men are not angels and focuses on the importance of the institutional rules… If, for example, democratic governments institutionally are incapable of balancing the public budget, a constitutional rule that limits increases in spending and taxes to no more than the private sector’s rate of growth will be more effective.

Hmmm…., a rule that limits the government so it doesn’t grow faster than the private sector.

Sounds like an idea worth embracing.

But while I like anything that builds support for the Golden Rule, I’m not sure it’s a sufficient condition for good policy.

Simply stated, we have too many examples of nations that followed the Golden Rule for several years, only to then fall off the wagon with a new splurge of spending.

There are two ways to deal with this problem. First, make the spending restraint part of a jurisdiction’s constitution, as we see in Switzerland and Hong Kong.

Second, augment the internal constraint of a spending cap with the external constraint of tax competition. Bluntly stated, destructive tax policies will be less likely when politicians are afraid that taxpayers will move across borders.

I spoke about this topic at a recent conference in Slovakia.

I also discuss the critical role of demographic change toward the end of my speech.

P.S. America’s Founding Fathers had the right solution. They set up a democratic form of government, but they strictly limited the powers of the central government. This system worked remarkably well for a long period, but then the Supreme Court decided that the enumerated powers listed in the Constitution were just a suggestion.

P.P.S. While it’s bad news to combine democracy with bad value, I want to emphasize that the problem is bad values. Most non-democratic societies have policies that are so evil and destructive (think Cuba and North Korea) that they make France seem like a beacon of economic liberty.

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The ongoing cluster-you-know-what of Obamacare is a source of unhappy satisfaction.

Part of me is glad the law is such a failure, but it’s tragic that millions of people are suffering adverse consequences. These are folks who did nothing wrong, but now are paying more, losing employment, suffering income losses, and/or being forced to find new plans and new doctors.

And it seems we get more bad news every day, as noted in a new editorial from Investor’s Business Daily.

ObamaCare rates will skyrocket next year, according to its former chief. Enrollment is tumbling this year. And a big insurer is quitting most exchanges. That’s what we learned in just the past few days.

Why do we know these three bad things are happening? Because that’s what we’re being told by Mary Tavenner, the former head of the Center for Medicare and Medicaid Services for the Obama Administration who has now cashed out and is pimping for the health insurance companies that got in bed with the White House to foist Obamacare on the American people.

IBD gives us the sordid details.

Why will 2017 rates spike even higher? In addition to the cost of complying with ObamaCare’s insurance regulations and mandates, there’s the fact that the ObamaCare exchanges have failed to attract enough young and healthy people needed to keep premiums down. Plus, two industry bailout programs expire this year, Tavenner notes. Oh, and she admits that people are gaming ObamaCare just like critics said they would: buying coverage after they get sick — since insurance companies can no longer turn them down or charge them more — then dropping it when they’re done with treatments. “That churn increases premiums. So you have to kind of price over that.”

And that’s just one slice of bad news.

Here’s more.

ObamaCare enrollment has already dropped an average of more than 14% in five states since February — a faster rate of decline than last year — as people get kicked off for not paying premiums. Finally, we learned on Tuesday that UnitedHealth Group (UNH) is planning to drop out of almost every ObamaCare market it currently serves after losing $1 billion on those policies. …Skyrocketing premiums, fewer choices in the marketplace, and people fleeing ObamaCare in droves after signing up. This isn’t exactly what Obama promised when he signed ObamaCare into law.

For those who were paying attention, none of this is a surprise. It was always a fantasy to think that more government intervention was going to improve a healthcare system that already was cumbersome and expensive because of previous government interventions.

By the way, IBD isn’t the only outlet to notice the ongoing disaster of Obamacare.

Let’s look at some other recent revelations.

Chris Jacobs writes that “For millions of Americans, the Left’s insurance utopia has rapidly deteriorated into a bleak dystopia” and that “the ‘cheaper prices’ that the president promised evaporated as quickly as the morning dew.”

John Graham explains that “CBO estimates Obamacare will leave 27 million uninsured through 2019 – an increase of almost one quarter” and that “CBO estimates 68 million will be dependent on the program this year through 2019 – an increase of almost one third in the welfare caseload.”

Betsy McCaughey opines that, “Obamacare is already hugely in the red. …over the next ten years Obamacare will add $1.4 trillion to the nation’s debt” and that “Insurers struggling with Obamacare are already drastically reducing your choice of doctors and hospitals to cut costs.”

Devon Herrick reveals that “Obamacare has caused more people to reach for their wallets after a medical encounter — not less” and that “all but the most heavily subsidized Obamacare enrollees would be better off financially if they skipped coverage and pay for their own medical care out of pocket.”

Jeffrey Anderson observes that “it seems possible that Obamacare has actually reduced the number of people with private health insurance” and that “Obamacare is basically an expensive Medicaid expansion coupled with 2,400 pages of liberty-sapping mandates.”

John Goodman notes that “Prior to Obamacare, many employers of low-wage workers offered their employees a “mini med” plan, covering, say, the first $25,000 of expenses” and that “Those plans are now gone… employees…are…completely uninsured”

The CEO of CKE Restaurants warns that “fewer people buying insurance through the exchanges, the economics aren’t holding up” and that “Ten of the 23 innovative health-insurance plans known as co-ops—established with $2.4 billion in ObamaCare loans—will be out of business by the end of 2015 because of weak balance sheets.”

Critics of Obamacare now get to say “we told you so.”

As the Washington Examiner opines:

…conservatives screamed a simple fact from the rooftops: Obamacare will not work. No one wanted to listen then, but their warnings are now coming into fruition. Obamacare, as constructed, attempted to fix a dysfunctional health care payment system by creating an even more complicated system on top of it, filled with subsidies, coverage mandates, and other artificial government incentives. But its result has been a system that plucked Americans out of coverage they like and forced them to pay more for less. …Taxpayers and insurance customers alike should demand replacing Obamacare with a system that reduces costs and improves quality by injecting actual choice and competition into the insurance market.

I especially like the last part of the excerpt. Which is why we need to go well beyond simply repealing Obamacare if we want to restore market forces to the healthcare sector.

P.S. I wrote about that it’s tragic that so many people are suffering because of Obamacare. I should add that there are some victims who actually are getting what they deserve.

P.P.S. In the long run, I fear taxpayers will be the biggest (and most undeserving) victims.

P.P.P.S.Though, in fairness, the law does have at least one redeeming feature.

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Since Pope Francis is very critical of capitalism, I suppose it’s fitting that he had a special meeting with America’s crazy-Uncle-in-the-attic, Bernie Sanders.

With my sixth-grade sense of humor, I confess that my initial instinct (perhaps motivated by the famous line from Animal House about “a wimp and a blimp“) was to write about “the Pope and the dope,” but I’m going to be somewhat mature and instead share some excerpts from a very good column by Charles Lane, an editorial writer for the Washington Post.

Here’s some of what he wrote before Senator Sanders’ departure.

Democratic socialist presidential candidate Sen. Bernie Sanders (I-Vt.) will depart soon for the Vatican… In keeping with Pope Francis’s call for a “moral economy,” Sanders has said he’ll discuss “how we address the massive levels of wealth and income inequality that exist around the world, how we deal with unemployment, how we deal with poverty and how we create an economy that works for all people rather than the few.”

While inequality should be a non-issue (assuming income is earned honestly), it is very desirable to reduce poverty and boost wealth for the less fortunate. As such, Lane suggests that the Vermont Senator read some of the research from World Bank economist Branko Milanovic.

…real income went up between 70 percent and 80 percent for those around the world who were already earning at or near the global median, including some 200 million Chinese, 90 million Indians and 30 million people each in Indonesia, Egypt and Brazil. Those in the bottom third of the global income distribution registered real income gains between 40 percent and 70 percent, Milanovic reports. The share of the world’s population living on $1.25 or less per day — what the World Bank defines as “absolute poverty” — fell from 44 percent to 23 percent.

And here are the most important passages.

Was all this progress because of big government? Nope, people were lifted out of poverty because the power of government was reduced.

Did this historic progress, with its overwhelmingly beneficial consequences for millions of the world’s humblest inhabitants, occur because everyone finally adopted “democratic socialism”? …To the contrary: The big story after 1988 is the collapse of communism and the spread of market institutions, albeit imperfect ones, to India, China and Latin America. This was a process mightily abetted by freer flows of international trade and private capital… The extension of capitalism fueled economic growth, which Milanovic correctly calls “the most powerful tool for reducing global poverty and inequality.” And he’s no supply-sider, but instead a left-leaning critic of modern economic orthodoxy — as his new book, “Global Inequality,” makes clear.

The final sentence is worth highlighting. Mr. Milanovic is not a libertarian firebrand. And since Charles Lane is an editorial writer at the Washington Post, it’s safe to assume that he isn’t an advocate of small government either.

For what it’s worth, they’re probably both supporters of something akin to the Nordic Model, which allows for a large welfare state and high tax rates, but otherwise is very sympathetic to free markets (i.e., open trade, light regulation, stable money, strong property rights, etc).

In other words, if we created a scale or a spectrum, there would be a big difference between the crazy left and the rational left. And the socialists and totalitarians would be in their own category.

The flags of the Nordic nations represent the rational left. I’ve put the Greek flag next to Bernie Sanders to represent the crazy left.

I actually had a hard time coming up with an example of a genuine socialist (i.e., government ownership of the means of production) who wasn’t also a totalitarian, but eventually settled on Clement Attlee, the United Kingdom’s misguided post-WWII Prime Minister who nationalized industries.

And Hitler and Stalin obviously are representatives of the totalitarian left.

I’ve placed Obama and Clinton on the spectrum based on what I think they actually believe, not what they say. So even though Hillary and Bernie are singing from the same nutty song sheet, I suspect she’s exaggerating her leftism and he’s downplaying his.

P.S. Returning to our original focus about which policies actually help the poor, Bono also understands that there’s no substitute for free markets.

P.P.S. My goal, of course, is to help rational leftists understand that free markets are just one ingredient in the recipe for prosperity. We also should have small government.

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